Research agency Fitch Solutions Country Risk & Industry Research has revised downward its copper price forecast for this year to about $8 800/t, down from $9 470/t it anticipated previously.
The agency says investor sentiment for copper has been weakening, as has demand for the base metal, in light of slower global growth.
Competing supply and demand factors have caused considerable volatility this year. After being driven to at an all-time high of $10 674/t on March 4, owing to concerns about supply disruptions after Russia’s invasion of Ukraine, copper prices began to fall sharply in late April as the global macroeconomic picture worsened and concerns grew about future demand from China, in particular.
A stronger dollar has also capped demand for the commodity, which is traded in the currency internationally.
However, persistent supply issues in Latin America will prevent copper prices from falling much further, and it will therefore remain elevated by historical standards.
Fitch Solutions believes the copper price will average no less than $7 500/t during the last quarter of the year and edge higher to average $8 400/t in 2023. The agency previously expected copper prices to average $9 580/t in 2023.
While this year is poised to experience a surplus of copper in the market, it will likely tip back into a deficit next year, owing to green-transition-related copper consumption growth.
In the meantime, Fitch Solutions says high levels of global inflation, a strong dollar and weakening industrial activity will continue to impact on copper demand and prices this year.
By 2026, Fitch Solutions anticipates improvements in copper supply will be outpaced by demand growth from the global transition to a green economy, pushing the market into greater deficit and driving prices higher towards the end of the decade.